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12 Jan 2022
One eye on the 2022 outlook, and one eye on 2023
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One eye on the 2022 outlook, and one eye on 2023
SAP SE (SAP:ETR) | 0 0 0.0%
- Published:
12 Jan 2022 -
Author:
Slowinski Stefan SS | Castillo-Bernaus Ben BC -
Pages:
11
SAP is set to report FQ4 results on Jan 27, however a pre-announcement is possible. SAP has pre-announced three of the last four quarters. Last year, SAP pre-announced on 14 Jan. Tik tok...
In theory, we should not get any surprises
Industry demand has remained strong through Q4, as evidenced by strong results from Accenture (who called out SAP ERP and Supply Chain), Oracle (although that was mainly a database license beat), Salesforce and Workday. There may be risks to licenses as omicron and supply chains may have caused some deal slippage, but consensus expects -21% y/y, which seems cautious, implying a 32% 2-year decline vs 28% on average the last two quarters. Consensus expects 23% c/c Cloud rev growth (20% y/y in Q3). CCB backlog growth was 22% y/y last Q, and SAP has suggested we should not see a meaningful acceleration. Consensus has a 31.8% non IFRS op margin in Q4, with sequential Opex up just 12.5% vs 13% on average, but FX moves may make that safe.
Focus on 2022 outlook. We expect a cautious beginning to the year.
SAP has already guided for 2022 operating profit to be flat to down y/y (like 2021) as the company accelerates its Cloud transition, licenses decline further, and maintenance begins to fall. We would expect SAP to begin the year with cautious guidance. If we had to guess, we would say 1) Cloud Revenues of EUR11.1 - 11.6bn, up 19-24% y/y at c/c (consensus EUR11.5bn, up 23.5% y/y) up from 18.4% in 2021, 2) Total Software revenues of EUR24.7 - 25.2bn, up 3-5% y/y at c/c (consensus EUR25.1bn, up 5.5%) vs 4% growth in 2021, 3) non IFRS Operating Profit of EUR7.9 - 8.3bn, flat to down 5% y/y (consensus EUR8.3bn) vs flat to -2% in 2021, 4) FCF of EUR4bn+ vs 4.5bn in ''21.
2023 revenue and profit growth acceleration to drive re-rating, eventually
With the 2022 guidance out of the way, we believe the market will increasingly focus on the extent to which SAP can convince the market it will see revenue and profit growth...